Lack of technical know-how on the part of government agencies responsible for monitoring oil production and the consequent reliance on the international oil companies (IOCs) to provide data are masking the nation’s exact oil production figures, BusinessDay has learnt.
The Department of Petroleum Resources (DPR), whose functions include the collation of production data from oil and gas activities in the country and monitoring of crude oil lifting at the terminals, has been depending largely on reports from IOCs to determine the volume of oil produced.
Nigeria is Africa’s top oil producer with over 50 years of commercial exploitation of crude oil and gas, but does not have standard equipment for monitoring and measuring production as IOCs had continued to resist several attempts to install meters for measurement.
Analysts have said that it is possible to install measurement meters at the well-head that will ensure oil production output is measured directly from the flow-station.
Currently, daily crude oil production figure ranges between 2.2 million barrels per day (bpd) and 2.3 mbpd, Andrew Yakubu, group managing director, NNPC, said recently, adding that the production figure has been very erratic as a result of the several attacks on the arteries from February to date.
Over the years, reports by the Nigeria Extractive Industry Transparency Initiative (NEITI) have shown that the quantity of crude oil produced in Nigeria and the volume exported are still unknown because the IOCs hide the necessary information from Nigerian government agencies such as DPR and the Nigerian National Petroleum Corporation (NNPC).
“We should know how much is coming from each wellhead, how much is coming from each field and from each company. But what is now used as production volume is what is derived from export terminals because the wellheads do not have the meters to be able to account for production,” said Emmanuel Usanga, controller, subsurface, Peak Petroleum Industries Nigeria Limited.
According to him, NNPC which is supposed to know the exact volume of production does not know and it is covering up its weakness.
“Ideally, there should be metering at each wellhead. If installed on the wellhead, it will transmit the production data directly to DPR, instead of the agency depending on reports by the companies. Government should insist that oil companies install meters on the wellhead. And as a JV partner to the IOCs, NNPC should contribute when cash call is made for the purchase of the meters,” he said.
According to industry watchers, the DPR, which is the custodian of repository data on the oil and gas industry, is ill-equipped and not properly staffed to do the job of supervising oil companies to ascertain oil output.
It was gathered that transportation to oil fields and flow stations is provided by oil companies for the DPR officials in the areas they are to supervise and because of this, there is so much compromise on the side of the government agencies.
Aside from this, there is the unnecessary political interference in the activities of the agency which has hampered it from playing its role as an internationally-standard regulatory agency like its other counterparts the world over.
“There are too many leakages in the system that would not allow the country to know what it is producing,” said Eddy Wikina, former external relation manager for Shell Nigeria Exploration and Production.
Nigeria’s production figure from secondary sources, according to Platts, global oil analysts, in its latest monthly oil market report, is put at 1.903 mbpd, as against the direct figure of 1.736 million that the government submitted to the Organisation of Petroleum Exporting Countries (OPEC) as daily production level in September this year.
“One would expect that government would be able to give a more accurate figure than external sources,” Diran Fawibe, chief executive officer, International Energy Services Limited, said recently.
“But the basic issue is that government appears not to have the accurate figure for production level and exports because of the problem of crude oil theft in the country. The inability of government to get the right figure could be part of the reason for the discrepancies.
“Government may also have to depend on agencies that may not necessarily have the correct data. That is the problem we have. I don’t think government is deliberately supplying a lower figure. It depends on who has computed the figures. But there is no excuse for government’s inability to supply accurate information, but you also have to question the information being produced by foreigners, except they show evidence as to how they came about their data,” he added.
At a conference on crude oil theft organised by the office of the special adviser to the president on Niger Delta in Lagos recently, stakeholders stressed the need to install meters at the point of production that would measure the quantity of oil produced.
Apparently concerned about the lack of reliable data on crude oil production in the country, the Nigerian Association of Petroleum Explorationists (NAPE) headed by George Osahon, DPR’s director, would address the issue of metering crude oil in its ongoing 2013 annual international conference.
Nigeria seeks to increase its crude oil production to 4 million barrels per day (bpd) and grow the reserves to 40 billion barrels by 2020, but the industry is being plagued by crude oil theft and delay in the passage of the Petroleum Industry Bill (PIB), which is aimed at overhauling the industry.